Federal Circuit upholds declaratory judgment action based on dialogue with patent holder

On December 4, 2009, the U.S. Court of Appeals issued a new opinion describing the situations in which a letter from a patent holder is sufficient to allow the recipient to file a declaratory judgment action to seek a declaration of non-infringement or invalidity of the patent. 

In the new case, Hewlett-Packard Company v Acceleron LLC, Acceleron sent a letter to HP identifying an Acceleron patent and inviting HP to meet with Acceleron to discuss licensing – but only if HP would agree in writing that no case or controversy existed regarding the patent.  After Acceleron rejected HP’s request for a mutual litigation hold period, HP filed a declaratory judgment action.  Acceleron moved to dismiss the case for lack of subject matter jurisdiction.

The Federal Circuit applied the factors that support a declaratory judgment action recently set by the Supreme Court in Medimmune Inc. v. Genentech, Inc. and the Federal Circuit in SanDisk Corp. v. STMicroelectronics, Inc.   In particular, the Court stated, with respect to Medimmune’s requirement that the dispute be “definitive and concrete”:

Intentionally or not, Medimmune may have lowered the bar for determining declaratory judgement jurisdiction in all patent cases.. . . But a lowered bar does not mean no bar at all.. . . [A] communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more, cannot establish adverse legal interests between the parties, let alone a ‘definitive and concrete’ dispute.  More is required to establish declaratory judgment jurisdiction.

Nonetheless, in this case the Federal Circuit found the facts sufficient to support declaratory judgment jurisdiction.  The Court found several factors to be particularly relevant, including

• the patent holder (Acceleron) contacted HP not once, but twice; and
• the patent holder set a short time frame for response, and insisted on HP agreeing to not file for declaratory judgment before providing more detail.

The court also noted that “Acceleron is merely a licensing entity, and without enforcement it receives no benefit from its patents.  This adds significance to the fact that Acceleron refused HP’s request for a mutual standstill.”